MUMBAI/NEW DELHI India's balance of payments swung to a surplus in October-December, marking a modest upturn in its financial position that analysts believe may prove resistant to global economic fragility.

Monday's central bank data also showed a narrowing of the current account deficit and higher foreign investments.

Volatile oil prices and worries about China's economy have hit foreign appetite for Indian assets and, while the European Central Bank and the Bank of Japan are providing plenty of monetary stimulus, the U.S. Federal Reserve is expected to continue raising interest rates, although only slowly.

"The risks to capital flows could be sharper outflows in foreign direct investments and we could also see some slowing of remittances on account of depressed oil prices for a prolonged period," said Shubhada Rao, chief economist at Yes Bank.

The fourth quarter balance of payments surplus was $4.1 billion, reversing a deficit of $856 million in July-September.

The current account deficit narrowed to $7.1 billion, or 1.3 percent of gross domestic product, from $8.7 billion.

Analysts expect a balance of payments surplus of nearly $15 billion for the full fiscal year ending in March, and a similar surplus in the coming fiscal year.

Those are much healthier levels than in 2013, when anticipation of a reining-in of the Fed's then stimulus programme led to big outflows that ballooned the balance of payments deficit and sent the current account gap to a record high of 4.8 percent of GDP.

Since then India's economy has picked up and inflation eased, and the central bank is widely expected to cut interest rates by at least 25 basis points at its policy review on April 5.

But India's external financial position seems unlikely to improve much from current levels.

Foreign investors have dipped in and out of Indian shares and bonds in the past two quarters, and a weakening global economy is raising concerns about exports and remittances.

The trade balance stayed in deficit in the December quarter, narrowing to $34.0 billion from $37.4 billion in the previous three months.

The capital account, which includes foreign direct investments and portfolio flows, registered a $10.54 billion surplus in October-December, up from $8.58 billion in the previous quarter.

"We expect the balance of payments to be in surplus in 2016/17 but with downside risks," said Abhishek Upadyay, economist at ICICI Securities Primary Dealership.

(Editing by Rafael Nam and John Stonestreet)

This story has not been edited by Firstpost staff and is generated by auto-feed.